Green tax credits mostly help the rich

By Jason Russell of The Washington Examiner.

"Federal tax credits for green energy spending largely benefit the wealthy, according to a new working paper published by the National Bureau of Economic Research.

The wealthiest 20 percent of Americans, who earn over $75,000 a year, receive 60 percent of the tax credits. The poorest 60 percent of Americans received only 10 percent of the tax credits. The tax credits encourage "clean energy" investments, such as solar panels, home weatherization, and hybrid or electric cars.

The study was authored by Severin Borenstein and Lucas Davis, both with the University of California, Berkeley.

"Since 2006, these credits have provided more than $18 billion in subsidies for households who make clean energy investments," Borenstein and Davis wrote. "Using rich data from tax returns we show that over the last decade U.S. clean energy tax credits have gone predominantly to higher-income Americans."

The tax credit for electric cars was even more beneficial for the wealthy than most of the other green energy tax credits. The wealthiest 20 percent of Americans claims 90 percent of all tax credit dollars for electric cars.

Borenstein and Davis criticized the tax credits for being non-refundable, meaning low-income taxpayers who don't owe taxes can't claim the credits. "We have not been able to come up with any coherent economic argument for making these credits non-refundable," they wrote.

The study only examined whether clean energy tax credits were used by wealthy or low-income Americans, not whether the credits are good for environment. Some studies, such as this one from June, have suggested that electric cars are actually worse for the environment than gas-powered cars, on average."